Moody's may lower Agrokor

Moody's Investors Service said it has placed under review for possible downgrade Agrokor d.d.'s B1 corporate family rating and the B1 rating on its €230 million 11% senior notes due 2007.

The possible downgrade is a result of continued weakening in credit metrics arising from the company's aggressive investment and acquisition-led growth strategy, resulting in significant increases in financial commitments and obligations.

Moody's said its review will focus on the company's growth strategy, ability to deleverage, financial policies and credit metric targets, particularly with regards to its liquidity profile and short-term debt refinancing strategy.

The review has been prompted primarily by the extensive capital investments related to the company's growth, concerns over the impact of increasing competition as foreign operators continue to make inroads into Croatia, the company's increased reliance on short-term financing requirements and concerns over the limited flexibility that exists at present within Agrokor's senior notes covenants, the agency said.

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